Your Right to Know

WASHINGTON — A federal judge rejected a legal challenge yesterday to a central part of President
Barack Obama’s health-care law, ruling that millions of low- and moderate-income people could
obtain health-insurance subsidies regardless of whether they bought coverage through the federal
insurance exchange or in marketplaces run by states.

Critics of the law said a literal reading of it would allow subsidies only in the 14 states that
ran their own exchanges.

But the judge, Paul L. Friedman of the U.S. District Court in Washington, said that was absurd
and contrary to the whole purpose of the Affordable Care Act.

“The plain text of the statute, the statutory structure and the statutory purpose make clear
that Congress intended to make premium tax credits available on both state-run and federally
facilitated exchanges,” he said.

After analyzing the law and its legislative history, Friedman said, “Congress assumed that tax
credits would be available nationwide” and “on any exchange, regardless of whether it is operated
by a state” or by federal officials.

The ruling is important because the federal government runs the exchange serving 36 states,
accounting for about two-thirds of the nation’s population.

Ronald F. Pollack, the executive director of Families USA, a liberal-leaning advocacy group,
said the ruling was “an important win for health-care consumers across the country.”

Sam Kazman, general counsel of the Competitive Enterprise Institute, a libertarian research
organization that is coordinating the lawsuit, said the plaintiffs would appeal the decision.

From Oct. 1 through Dec. 28, nearly 1.2 million people bought health insurance in the federal
marketplace, and nearly 1 million chose plans in state exchanges.

About four-fifths of people choosing health plans at both levels of government qualified for
subsidies that reduced their premiums.

The lawsuit was filed by people in states using the federal exchange: Tennessee, Texas, Virginia
and West Virginia. They objected to being required to buy insurance even with subsidies.